VZCZCXRO1623
RR RUEHLN RUEHVK RUEHYG
DE RUEHDBU #0895/01 1900857
ZNR UUUUU ZZH
R 080857Z JUL 08
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 0750
INFO RUCNCIS/CIS COLLECTIVE
RUEHIL/AMEMBASSY ISLAMABAD 0165
RUEHBUL/AMEMBASSY KABUL 0196
RUEHNE/AMEMBASSY NEW DELHI 0134
RUCPDOC/DEPARTMENT OF COMMERCE WASHINGTON DC 0027

UNCLAS SECTION 01 OF 05 DUSHANBE 000895 
 
SIPDIS 
SENSITIVE 
 
DEPARTMENT FOR SCA/CEN 
USTR FOR MARK MOWREY AND ELIZABETH HAFNER 
DEPARTMENT OF COMMERCE FOR DANICA STARKS 
 
E.O. 12958: N/A 
TAGS: ETRD USTR ECON PREL AF KG KZ TI TX UZ
SUBJECT: 2008 U.S.-CENTRAL ASIA TIFA COUNCIL MEETING 
 
REF: 2007 STATE 117583 
 
This message is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) SUMMARY: The fourth meeting of the U.S.-Central Asia Trade 
and Investment Framework Agreement (TIFA) Council, held June 17-18 
in Dushanbe was marked by strong participation by the private sector 
and by Afghan observers.  However, representatives from the TIFA 
members themselves failed to address issues raised by private sector 
and NGO participants and the discussion sessions elicited little 
discussion.  Kyrgyzstan did not even send a representative from the 
capital.  While the delegations did not officially adopt the draft 
Action Plan for further cooperation, they promised to send their 
comments on it to USTR, which could lead to adoption of the action 
plan later this summer.  END SUMMARY. 
 
¶2. (U) The Delegations: 
 
AFGHANISTAN (OBSERVER) -- Mr. Azim Mukhammad, Head of the 
Directorate of International Trade and Industry 
KAZAKHSTAN -- Mr. Almas Kosunov, Deputy Minister of Industry and 
Trade 
KYRGYZSTAN -- Mr. Turatbek Esenkulovich Djunushaliev, Ambassador of 
Kyrgyzstan to Tajikistan. 
TAJIKISTAN (HOST) -- Mr. Gulomjon Bobozoda, Minister of Trade and 
Economic Development 
TURKMENISTAN -- Mr. Kurbanmurad Kurbanmuradov, Minister of Economy 
and Development 
UNITED STATES -- Mr. Mark Mowrey, Acting Assistant United States 
Trade Representative for Europe and Middle East 
UZBEKISTAN -- Mr. Narsiddin Nazhimov, First Deputy Minister of 
Foreign Economic Relations, Investments and Trade 
 
BUSINESS AND GOVERNMENT SESSIONS 
 
¶3. (U) The first day of meetings brought together government, 
business, and NGO representatives in panel sessions focusing on 
improving Central Asian trade facilitation, government efforts to 
reduce administrative barriers in trade, and improving logistics and 
regional trade and transit infrastructure. 
 
Trade Facilitation: 
 
¶4. (U) William Veale, Executive Director of the U.S.-Kazakhstan 
Business Association, chaired the panel on trade facilitation. 
Veale opened by saying the goal of business is to serve a larger 
market from a base in the region.  He cited the case of FedEx 
operations in Kazakhstan as an example of the success that can be 
achieved.  Under an arrangement whereby customs questions are dealt 
with after deliveries are made, FedEx is able to bypass bureaucratic 
delays for more efficient operations.  Ainura Cholponkulova, 
Executive Director of the American Chamber of Commerce in 
Kyrgyzstan, followed by talking about the successful conference on 
Development of Trade, Transportation, and Transit held in Bishkek in 
April that brought together 150 business and government 
representatives who adopted an action plan calling for 
simplification of cross-border transit and establishing a National 
Council for Trade and Transport that will allow for closer 
government-business cooperation.  Temirbek Shabdanaliev, Executive 
Director of the Kyrgyz Transporters Association and Kairat 
Kasymbekov from the Forum of Entrepreneurs of Kazakhstan spoke about 
a World Bank (WB) project that used a variety of measures to monitor 
the efficiency of trade and transport performance.  In particular, 
Mr. Shabdanaliev was able to cite, with great specificity, the 
dollar amount for bribes required to cross many borders. 
Nevertheless, the study showed a trend towards improved efficiency 
QNevertheless, the study showed a trend towards improved efficiency 
in customs operations overall in 2007 as compared with 2006.  David 
Featherstone, USAID Regional Trade Liberalization and Customs 
Advisor, spoke about the need to improve transparency and access to 
information, citing the lack of a single comprehensive government 
trade website in any Central Asian country.  Featherstone noted that 
an independent website covering Central Asian trade issues is under 
development at www.trade-ca.org. 
 
Administrative Trade Barriers: 
 
¶5. (U) The heads of delegations next spoke about government efforts 
to reduce administrative trade barriers.  The Kazakh representative 
reviewed the deficiencies of Kazakhstan's current border-crossing 
regime, but he pointed to the law on imports and exports adopted in 
October 2007, under which he said Kazakhstan has adopted the 
principal of a "Single-Window" for processing of import and export 
documents.  Kazakhstan has created an inter-agency system for 
 
DUSHANBE 00000895  002 OF 005 
 
 
monitoring cross-border trade, and he noted that Kazakhstan ranked 
near last in Central Asia in the number of documents needed for 
processing of imports and exports. 
 
¶6. (U) The representative of Turkmenistan gave a general 
presentation on his country's current economic situation and plans 
for future development.  The presentation did not address specific 
administrative trade barriers.  The Uzbek representative said 
Uzbekistan was working to improve its customs procedures and that 
the situation was improving.  His presentation also did not address 
specific trade barriers. 
 
Improving Logistics: 
 
¶7. (U) Hugo Minderhoud, American Chamber of Commerce Uzbekistan, 
chaired the panel on improving logistics and regional trade and 
transit infrastructure.  He emphasized the need for improved 
integration across the region.  Bahriddin Azamatov, Asian 
Development Bank, described the work of the Central Asian Regional 
Economic Cooperation (CAREC) Program.  CAREC aims to develop and 
improve transport corridors, and has six road projects completed or 
underway.  Representatives from the governments of Tajikistan and 
Kazakhstan then enumerated their countries' spending on road, rail, 
and airport projects.  A Tajik representative noted that the 
U.S.-built bridge connecting Afghanistan to Tajikistan was an 
important step in improving North-South trade, but that it had yet 
to be fully exploited. 
 
REGIONAL ELECTRICITY MARKETS 
 
¶8. (U) The government to business panels were followed on the first 
day by a presentation on the creation of regional electricity 
markets.  Participation in this discussion was limited to government 
only.  George Krol, Deputy Assistant Secretary of State for South 
and Central Asia, chaired the session on building regional 
electrical markets.  Saying that "market mechanisms can help all of 
us," he encouraged the building of an electrical link to South Asia 
to bring economic growth and stability to Afghanistan and western 
Pakistan.  Abdul Wakil from the Afghanistan Infrastructure 
Rehabilitation Program continued this theme, noting that Afghanistan 
had to "start over again from point zero" to build an electrical 
infrastructure.  He gave a detailed account of the status of the 
Afghan North East Power System for electrical generation, 
transmission, and distribution. 
 
¶9. (U) Khamidulla Shamsiev, Director of the Coordinating Dispatch 
Center briefly described the Center's role in coordinating 
electrical transmission throughout the Central Asian region.  Chief 
Dispatcher Umar Karimov stressed the need for transparency and the 
harmonization of databases maintained by utilities in all Central 
Asian countries, to bring the collection of data to a level that 
will allow electrical costs to be computed in Central Asia just as 
they are in the developed markets of Europe. 
 
¶10. (U) Akram Sulaimanov, Tajik Deputy Minister for Energy and 
Industry, spoke on the Central Asia South Asia Electricity 
Transmission and Trade Project (CASA 1000) to build an energy 
corridor linking Central Asia with Pakistan.  He gave a detailed and 
optimistic account of current implementation status and provided 
projections of growing power demand through 2020. 
 
TIFA COUNCIL MEETING 
 
¶11. (U) The second day of meetings consisted of the Fourth Annual 
U.S.-Central Asia TIFA Council, attended by government delegations. 
QU.S.-Central Asia TIFA Council, attended by government delegations. 
The agenda covered a range of issues, including practical problems 
of trade, benefits of the Single-Window policy, developments in the 
Central Asian investment climate, access to information on 
import/export procedures, and the TIFA Action Plan for 2008-09. 
 
¶12. (U) The TIFA Council meeting was opened by the Tajik Minister of 
Trade and Economic Development, Mr. Bobozoda. In his opening 
remarks, Mr. Bobozoda said that for the past several years the TIFA 
Council had proven an effective, practical instrument to strengthen 
trade cooperation and improve the investment attractiveness of 
Central Asian countries.  He noted the practical problem presented 
by the fact that Central Asian capitals were at least 2000 
kilometers from the nearest sea ports, but emphasized that Central 
Asia could serve as a transit route for trade from throughout the 
Eurasian continent if Central Asian countries removed trade barriers 
and built trans-national transportation routes.  Referring to last 
winter's energy crisis in Tajikistan and the region, Bobozoda said 
the crisis had forced Tajikistan to rethink its priorities and give 
more attention to regional cooperation. 
 
DUSHANBE 00000895  003 OF 005 
 
 
 
¶13. (U) Noting that Central Asia was among the world's most energy 
rich regions, he called for development of stronger trade relations 
between Central Asian countries.  He also noted that Afghanistan was 
an increasingly important trading partner of Tajikistan, saying that 
the U.S.-funded bridge at Nizhniy Pyanj would soon become the 
"transportation artery" of the region.  Bobozoda said the GOTI 
planned to establish a Free Economic Zone near the bridge. 
 
 
¶14. (U) Mr. Bobozoda said trade and logistics simplification were 
key factors in private sector development.  It was clear, the 
Minister said, that none of the Central Asian countries could 
compete individually in the global economy, and he advocated a 
common economic space in Central Asia. 
 
¶15. (U) AUSTR Mark Mowrey noted that the World Bank gave Central 
Asian countries low rankings for ease of cross-border trade, and 
urged adoption of a TIFA action plan for the coming year.  The Uzbek 
representative talked about Central Asia's large resource potential 
and Uzbekistan's desire to develop better bilateral and multilateral 
relations.  The Afghan representative said his country wanted to 
reestablish old ties and create new opportunities, and he pointed to 
Afghanistan's importance as a land bridge between Central and South 
Asia. 
 
16.(U) The Uzbek representative talked about Central Asia's large 
resource potential and Uzbekistan's desire to develop better 
bilateral and multilateral relations.  The Afghan representative 
said his country wanted to reestablish old ties and create new 
opportunities, and he pointed to Afghanistan's importance as a land 
bridge between Central and South Asia. 
 
Problems of Trade and the Advantages of the "Single-Window": 
 
¶17. (U) Tapio Naula of USAID described the benefits of a 
"Single-Window" policy which allows parties involved in trade and 
transport to file the necessary documents at a single entry point in 
order to fulfill all import, export, and transit-related regulatory 
requirements.  Single-window systems in other countries greatly 
decreased logistical costs of international trade.  Logistical costs 
in Central Asian countries were among the highest in the world, he 
said. 
 
¶18. (U) Jonathon Hornbrook of the German Agency for Technical 
Cooperation (GTZ) spoke on the practical challenges to trade in 
Central Asia.  He provided numerous examples of the difficulties of 
conducting trade in Central Asia.  Nevertheless, he said that there 
are signs of progress and that "spring is in the air."  Hornbrook 
said that a low World Bank Ease of Doing Business rating (170 out of 
180) spurred Kazakhstan to take positive action, including a 
presidential decree to adopt a single-window approach that in effect 
will allow for "one-stop shopping."  In Kyrgyzstan a presidential 
decree also has led to a single-window process and improvements in 
the banking system. 
 
¶19. (U) Larisa Kislyakova from the Tajik Single-Window Working Group 
said that Group members visited a number of countries to see the 
system in operation, and would complete work within the month on a 
proposal for Tajik Government approval.  Rustam Akberdin from the 
Kazakh working group described a program for customs reforms that 
will include the introduction of a single-window system. 
 
¶20. (U) In the ensuing discussion of administrative barriers and the 
Q20. (U) In the ensuing discussion of administrative barriers and the 
single-window approach, the Uzbek representative asked if anyone 
really knew how much a single-window system cost to operate. 
Uzbekistan had attempted to implement a system for exports but found 
the system made exporting more difficult unless simultaneously 
implemented at all customs posts.  Hornbrook replied by repeating 
detailed cost estimates he had given in his presentation -- for 
example the estimated 2 million Euros for the system in Kazakhstan 
-- and he noted that based on the experience in Senegal, the 
development cost can be recouped in two to three years.  Mr. Naula 
concluded the discussion by saying that Single-Window by itself 
would not eliminate trade barriers.  For this to happen, procedures 
and regulations had to be modernized first, before implementation of 
Single-Window. 
 
Investment Climate: 
 
¶21. (U) Andrea Dall'Olio of the World Bank's Central Asia regional 
office discussed developments in the investment climate in the past 
year.  He reviewed the World Bank's Ease of Doing Business report, 
and pointed out a few generally positive trends in Central Asia, 
 
DUSHANBE 00000895  004 OF 005 
 
 
commending Kazakhstan for using a relatively low ranking as impetus 
for improvement and noting that Uzbekistan was reforming too.  Mr. 
Dall'Olio posed a rhetorical question: what do businesses want?  He 
answered his question by saying that they want simple and 
transparent regulations that are cheap and fast. He pointed to a 
direct correlation between the Ease of Doing Business report and the 
size of the informal sector, saying the harder it was to be a 
legitimate business, the more likely a businessman would chose to 
operate in the grey market, and the size of the informal economy 
correlated negatively with overall employment.  Referring to the 
problem of corruption, Mr. Dall' Olio said "entrepreneurs cannot 
distinguish between official and nonofficial payments."  He 
advocated for public administration reforms, specifically raising 
public sector salaries to combat corruption. 
 
 
¶22. (U) Following this presentation, representatives from all 
delegations expounded on the virtues of investing in their 
countries.  Tajikistan touted its hydropower potential, while 
Kazakhstan, Uzbekistan and Turkmenistan noted their extensive energy 
reserves and their capability to export them to neighboring 
countries.  No delegation mentioned corruption as a deterrent to 
investment. 
 
Access to Information: 
 
¶23. (U) David Featherstone, USAID funded Regional Trade 
Liberalization and Customs Project (RTLC) consultant, made a 
presentation on the issue of access to import and export regulatory 
information.  He spelled out a simple formula - access to 
information equals trade facilitation equals increased trade 
activity, equaling increased economic growth.  Mr. Featherstone 
described the key functions of laws and regulations based on the 
principles of World Customs Organization (WCO) and revised Kyoto 
Convention.  He then showed some practical examples of import/export 
information operations, including the United Kingdom Revenue and 
Customs Department and the website of Business link in the United 
Kingdom.  During a brief discussion following the presentation, 
participants generally agreed that countries' trade information 
websites needed more up to date information in order to be of use to 
businesses.  However, the Tajik delegation argued that their website 
was indeed up to date. 
 
Discussion of 2007-08 TIFA Action Plan: 
 
¶24. (U) The concluding session was devoted to discussion and 
adoption of an action plan for 2007-08.  Under the U.S.-proposed 
plan, each country was asked to focus on one or two factors from the 
World Bank's Ease of Doing Business Report, identify one or two 
factors from the TIFA discussions on which they will focus attention 
to facilitate trade, provide quarterly reports on progress towards a 
single-window system, and identify a working-level contact for TIFA 
issues. 
 
¶25. (SBU) Kazakhstan proposed deletion of the requirement for 
quarterly reports on single-window implementation.  Uzbekistan 
seconded that proposal.  Tajik Deputy Minister of Economic 
Development and Trade Larisa Kislyakova defended the need for 
quarterly reporting, saying that otherwise no one would pay 
attention to the action plan.  All representatives agreed that apart 
from the issue of quarterly reporting, on the whole the action plan 
was acceptable as proposed.  AUSTR Mowrey asked that all 
Qrepresentatives submit their proposed changes to USTR in writing by 
the end of June, with the goal of finalizing the action plan by the 
end of July.  He further suggested that each country work to 
eliminate one or two trade barriers during the coming year. 
 
¶26. (U) In conclusion, AUSTR Mowrey reiterated that the USG viewed 
TIFA as a useful tool for improving the trade and investment 
environment in Central Asia.  Although there were problems, there 
were also signs of progress and hope.  Private sector involvement 
continued to be critical.  AUSTR Mowrey announced that USTR would be 
happy to host next year's TIFA Council in Washington, D.C. 
 
¶27. (U) The TIFA council received favorable and extensive press 
coverage in Russian language newspapers in Tajikistan.  Mr. 
Shabdanaliev's presentation from Kyrgyzstan received the most 
coverage, perhaps because his presentation clearly outlined the 
customs and transportation issues in Central Asia, based on surveys 
and analysis. 
 
COMMENT 
 
¶28. (SBU) Positive elements of this year's TIFA sessions included 
 
DUSHANBE 00000895  005 OF 005 
 
 
strong participation by the private sector and the Afghan observers, 
and the formal establishment of an American Chamber of Commerce in 
Tajikistan on the eve of the TIFA meetings.  Negative elements 
included the failure of Kyrgyzstan to send a delegation from Capitol 
(their Ambassador in Dushanbe attended, but did not participate), 
and the failure of delegations to engage on issues of investment 
climate and trade facilitation.  At times delegations flatly denied 
assertions made by private sector and NGO participants, for example, 
on the absence of up-to-date customs websites.  The discussion 
sessions were notable for the absence of discussion.  This and the 
opposition of Uzbekistan and Kazakhstan to quarterly reports on 
progress on the TIFA Action Plan called into question their 
commitment to the changes and reforms TIFA envisions. 
 
¶29. (U) USTR and Commerce Department have cleared this cable. 
 
JACOBSON